Sunday, February 21, 2021

The Decline of Blue Cities

Joel Kotkin’s sane and sensible evaluation of the current and future status of the American city-- that should be the blue American city-- should be required reading.  

The issue, one that interests those of us who inhabit one of America’s big cities, concerns whether these places are going to survive. Is their current destitution, what with decaying infrastructure, the flight of the wealthy and the not-so-wealthy,  the lost tax base, the spike in crime, the decline and fall of public and even private education, a passing phase or an augury for the future? 

Needless to say, every other day we read a story about New York’s imminent comeback. Most of these stories come from real estate developers and property owners who are barely staying afloat. They elicit more than a grain of skepticism. It will take more than talking your book to revive New York real estate.

For a fun fact, we can report that over 90% of New York’s restaurants cannot pay the rent. Thank you, Governor Cuomo. As you know, today the press is trying to hold Andy to account for thousands of nursing home covid fatalities. Obviously, it means that the news will not damage the Democratic Party’s election prospects.

As we read today, from the head of New York’s subway system, one Sarah Feinberg,  that the system is safe, but that we need more police and mental health interventions, we also note that the system has become even more dangerous, because local government officials have given criminals the green light. If a violent felon throws an older woman on the subway tracks, he will quickly be released from prison, without having to put up bail.

Anyway, here is Kotkin’s assessment.

Even before 2020, America’s great cities faced a tide that threatened to overwhelm them. In 2020, the tsunami rose sud­denly, inundating the cities in ways that will prove both troubling and trans­formative, but which could mark the return toward a more hu­mane, and sustainable, urbanity. The two shocks—the Covid-19 pandemic in the spring, followed by a summer punctuated by massive social un­rest—have undermined persistent fantasies of an inevitable “back to the city” migration.

Of course, the press and the Biden administration are working long and hard to bury the story about the spring and summer riots. Why else do they keep harping on the dangers of white supremacy.

Before the pandemic, cities were already experiencing a huge class divide, slackening population growth, rising crime, and dysfunctional schools. Their white-collar-dominated economies were clearly vul­nerable to technological changes, and they were presided over by a political class increasingly out of touch with reality and often hostile to middle-class concerns. Now, the urban white-collar employment and tourism economies have been devastated, while other sectors such as manufacturing, port development, and logistics had already de­parted.

And then there is the crime, whose perpetrators and victims are most often black. Keep in mind that the Biden administration has declared war on white supremacy. It would pathetic if it were not so stupid.

The weeks, even months, of civil disorders occurring after the death of George Floyd may prove even more consequential. Cities were already facing rising crime before the Floyd incident. Last year, New York’s bodegas experienced a 222 percent increase in burglaries, while brick-and-mortar chains like Walgreens were shutting down locations in San Francisco due to “rampant burglaries.”

More middle-class families appear happy to have relocated to the suburbs, or to places even far­ther away, where houses are less expen­sive. One in five Americans, according to Pew, knows someone who has moved due to Covid. . . .

Today, many “people of color” are equally or even more likely to flee dysfunctional cities. Back in the 1960s, some middle-class minori­ties may have felt compelled to stay in their city communities because of discrimination; now they are far less likely to stay. The stereotypes of the 1950s and 1960s no longer hold. In the fifty largest U.S. metro­politan areas, 44 percent of residents live in racially and ethnically diverse suburbs, ranging from 20 percent to 60 percent nonwhite.

In fact, minorities—particularly black and immigrant business owners as well as small property owners—are the most exposed to street crime. Large corporations and nonprofits might pledge billions to fight “systemic racism,” but past experience shows that rioting and crime will over time reduce investment in poor inner-city areas.

Kotkin concludes that we saw it before, not just the rioting and violence, but the promises from political leaders that they will rectify the situation by offering more diversity training:

The Los Angeles civil unrest of thirty years ago, which occurred during a severe recession arising in part from the post–Cold War decline of the aerospace industry—a truly horrendous event I wit­nessed and covered—hardly improved conditions despite repeated pledges from corporate, nonprofit, and political leaders. Instead, South Central Los Angeles, the site of two of the worst riots in American history, has suffered from widening underperformance relative to the surrounding area in terms of homeownership, income, and educational attainment.

As for the spikes in crimes, they have been produced by local prosecutors, mayors and governors. Allow me to observe that someone voted these people into office. If those who vote for these leftists are suffering, they have no one to blame but themselves:

Today, progressive district attorneys and city councils in New York, St. Louis, San Francisco, Seattle, Portland, Philadelphia, and more recently Los Angeles are increasingly committed to ending bail and emp­tying prisons of all but the most heinous violent criminals. Lenient law enforcement and turning a blind eye to rioting, chaos, public defecation, illicit drug use, and massive homelessness seems a poor way to get people or companies to move to a city.

The radical leftists who run city councils are not unhappy to see the wealthy flee their cities:

Some see these conditions as socially useful because they push out the wealthy residents who have driven so much of recent urban growth. Progressives at the Guardian, In These Times, and the Atlantic see the potential exodus of wealthy residents as “a good thing,” allowing a more just and accessible city to be “reborn.” At the same time, the growing socialist movement in key urban areas seems much less concerned with supporting the private economy and has often acted to limit job-creating development, whether from Amazon or a recent “Industry City” proposal in Brooklyn. There is one glar­ing problem with expelling the rich, however: the “one per­cent” pay 43 percent of New York City income taxes.

The result has been: fewer jobs as companies pick up and leave:

But who needs an economy when you can march for social justice? It may feel good for Seattle radicals to wage a virtual war with Amazon, the company that has driven much of that city’s economic growth. But whatever the merits of their critiques, the results might now boost opportunities for suburbanites, as the company continues to shift much of its growth to the surrounding suburbs and other re­gions.

For sheer lunacy, it is impossible to beat San Francisco, the pri­mary breeding ground for well-financed digital start-ups. The city continually burdens on tech firms, rejecting even their charity. The San Francisco Board of Supervisors recently voted ten to one to officially condemn Mark Zuckerberg for donating $75 million to a hospital. As observer Michael Solana suggests, activists now blame Zuckerberg and other oligarchs for having somehow “ex­tracted” their wealth from the terroir of San Francisco, and they deserve to be “demonized, scapegoated, and punitively targeted.” 

Heaven knows when Zuckerberg will figure out what is going on and leave town. Surely, these local leaders are beyond incompetent. They are morally depraved, consumed by hatred.

But, will Joe Biden bail these cities out? Will he reward them for their horrendous mismanagement? Not so fast, Kotkin says. The cost is to high and the middle class suburban voters who would foot the bill are likely to balk.

Some urban boosters believe that the election of Joe Biden, who received overwhelming support in urban centers, will ensure lavish support for cities’ financially devastated transit systems, reeling prop­erty markets, and often bloated urban government bureaucracies. But the scale of government action—for example the universal basic income proposed by urban progressives to make up for a lack of decent jobs—would cost, by one recent estimate, some three trillion dollars annually. Such expenditures would likely offend the largely middle-class suburban voters responsible for Biden’s defeat of Trump, who would have to pay for such largesse.

Obviously, the state of the real estate market is as good an indicator as any of the current state of affairs:

It is pretty clear that geographic hierarchies are being reshuffled. Certainly, the flight from density—in residences and in the workplace—is well underway. A recent Harris poll found that upwards of two in five American city dwellers are considering a move to less crowded places. The National Association of Realtors reports that households are “looking for larger homes, bigger yards, access to the outdoors and more separation from neighbors,” according to its surveys. Many diehard city residents, reports the New York Times, are now putting bids on suburban houses further from the city. Bostonians, notes a new report, are following a similar course.

As for commercial real estate, especially offices, the situation is dire:

The downtown office environment is in particularly dire shape, with some estimates of a serious financial haircut for $3.3 trillion in commercial mortgages. Loan volume for New York real estate has dropped 50 percent from last year. Particularly vulnerable will be financially dodgy, mega-dense developments like Hudson Yards. The much-ballyhooed drive for “transit-oriented development,” beloved by planners and some developers, has been made largely irrelevant by the emerging vision of “telecities”;9 dispersion is clearly winning over concentration.

Kotkin sees through the stories about the imminent recovery of Manhattan:

Places like Manhattan will not become a concrete prairie, but they are also unlikely to return as world-beaters like the urban lobby and their media claque have claimed. Of course, there will be an inevitable narrative focusing on “signs of New York’s 2021 comeback,” as cele­brated recently in the New York Post. This may be psychologically pleasing, but in my opinion the cases cited—the arrival of two new restaurants and a bid to revive the now defunct Village Voice (which I once wrote for)—do not suggest the basis of a real urban recovery.

What does history tell us?

Cities will recover from the pandemic, but not quickly. Optimists citing the medieval urban recoveries that occurred after the plague often miss the centuries of stagnation that followed. Paris had two hundred thousand residents in 1300; it took two centuries for the city, which lost a third of its population, to recover to that level. Similarly, the suggestion that the pandemic will have as fleeting an effect as 9/11 had ignores the com­munications revolution of the past twenty years and, perhaps most important, the rise of “socialist” politics in several major cities.

Indeed, the situation is so dire that propaganda will not solve it. Since the local mainstream media has nothing to offer but propaganda, we are in deep trouble:

Good propaganda and media attention cannot make up for dis­appearing jobs or leaders who deny that high taxes, oppressive regula­tion, looting, fires, and crime are the foundations of the current urban crisis. As long as these realities are not confronted, we could see something distressingly akin to what happened after the rapid rise of street crime in the 1960s and ’70s. Cities like New York may remain irresistibly compelling for the young and some of those at the top of the economic pyramid—financial engineers, software whizzes, trust fund gentry, real estate moguls—but most businesses as well as mid­dle and aspirational working-class families will gravitate else­where.

Placing ever higher taxes on the affluent in New York, or allowing the homeless to dominate in San Francisco, is one way to make the big earner (and taxpayer) a potential Floridian, Tennessean, Arizonian, or Texan.


Anonymous said...

I just love when Mayor Bill rides the subway with his police detail in tow and tells everyone how safe it is.

hayek said...

Will the next economic downturn be precipitated by the lenders burned as mortgages on these sky scrapers go into default? The bankruptcy bar will at least be in high cotton.

urbane legend said...

Paris had two hundred thousand residents in 1300; it took two centuries for the city, which lost a third of its population, to recover to that level.

Two centuries, eh? By that time climate change will have put NYC and San Francisco well under water, so all of this will work out fine.

Governors like Cuomo and mayors like de Blasio should be dragged into the street and . . . recalled; yeah, that's it, recalled.

370H55V said...

I find it very frustrating to agree almost always with Kotkin, and note that after four years he no longer is able to take every opportunity he can to take a potshot at Donald Trump.

I guess that now that the left is firmly in control in Washington (and, as he obviously points out) in most major American cities, he can go back to regurgitating the same stuff with which he's been making a good living for years, and whine about how "gentry liberals" are destroying America.

Walt said...

And as people flee the cities for the suburbs and exurbs, the government wants to turn the suburbs and exurbs into cities by overturning zoning laws, increasing density and adding public housing projects in the name of social justice.

Sam L. said...

Urbane, you left out "...with prejudice".

370H55V, who is this Kotkin you mentioned?

370H55V said...

@Sam L

Are you kidding? Did you even read the article? Go back and read the first two words.

Sam L. said...

Ya got me there. I didn't. Mea Culpa. Reading through it, though, seemed familiar to me. Apparently, my brain was elsewhere.

jfmoris said...

When the value of all that prime real estate is ruined by lousy government, who will have the money and an inside track to know when government policy will change? The same wealthy (D)irtbag bureaucrats and politicians who screwed things up will be the new owners, and the cities will be kept "pure' with policies making it too expensive to live there unless you are well connected to the right gang.